Any tax has both advantages and disadvantages. With VAT a key objection is that it is regressive. Poorer people spend a higher proportion of their income on tax than those better off. The point I was making above is that as part of the EU we have little choice in how we manage our sales taxes. Outside we have much more opportunity to adapt them to our economic advantage as a country or maybe even give the poor a fairer crack of the whip. I don't see that as insanity.
@JPN My mention of insanity was not directed at you, but at the "every thing that is EU is bad" attitudes no matter the extent to its acceptance elsewhere.
In the matter of progressive and regressive taxation, I am not sure that the negatives are an absolute argument against it. IMO only if it were the sole taxation levied on persons would that be valid. However the UK system does have allowances, tax credits, and progressive tax rates to modify the repressiveness. I'll not argue on their adequacy in protecting the low income sector.
Progressive only taxation has the danger that it can discourage entrepreneurship, and saving (if there's anything left to save); something not good for the economy. It is, as my banking economics tutor used to teach, "the rich have a greater propensity to save" (invest). I'd rather have that freedom, than the state.
TBAH whatever my opinion of Brexit, the nature of the top politicians and businessmen leading and egging on does not fill me with any confidence that the lot of the lesser folk will not deteriorate.
But why was VAT ever introduced in the first place ?
It is simply a rip off tax which certain firms and individuals do not pay but the average person does.
Even if you employ a tradesman to do some work VAT is added to the bill, that's money for nothing for the government.
How do some individuals avoid paying VAT ? Well if you own a company and go out for a expensive meal with family and friends just put it down to expenses, same with other stuff you buy, new laptop, well that's for the company and if you own the company who will question it.
VAT should have never been introduced, the more money the government think they have access to the more they spend in advance that's why the national debt is so high.
VAT was the worst thing ever thought of Just like the Poll tax
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At last, an agreement has been reached. They now move on to trade deal negotiations. This will not be easy if the first round is anything to go by. The UK has not come out of this week's talks at all well.
@gleneagles you should check with your accountant, VAT is not reclaimable on lunches.
I was going to confess that I had an accountant and was just going to bed with her (swmbo) but I thought the comment might be a bit strong for this forum as I would have left the bit in brackets out.
I found an article on PT, which to my mind shows how arbitrary some decisions on its application were.
One example of that arbitrariness came my way in 1967 as my marriage loomed.
A friend, wholesaler rep, offered to acquire wedding gifts at a discount for anyone who wanted to use his services. Someone wanted a canteen of cutlery. It turned out that bought combined the PT element was very high, but as cabinet and cutlery apart much less. The natural outcome was that the elements were listed separately but together. Incidentally the relative cost then to now was much greater.
VAT seems greatly more logical.
I can't remember back to 1973 but when VAT was introduced it was at a standard rate of 10% against PT at 25%. It was later reduced to 8%.
I cannot think prices went up when VAT was introduced. There would have been riots in the streets
10-12-2017 5:03 PM - edited 10-12-2017 5:08 PM
Of course the great British public will always lay price rises at the foot of same often unrelated tax change, and ignore other factors.
CPI inflation Great Britain 1973 10.58 %